Market Thoughts

US stocks finished near their best levels Tuesday, with the S&P 500 extending its recent rally to a fresh high and the Dow closing above the 15,000 milestone for the first time. Similarly, European shares closed higher following some better-than-expected earnings reports, and upbeat manufacturing data from German. On the local marlet, the FBM KLCI jumped 24.71 points to 1776.73 as the post-election rally extends itself. Following fresh highs in US, German and Japan markets, we expect the KLCI to be positive today with immediate resistance at 1800 points.

We expect to see some profit taking on GLCs and index-linked stocks. Meanwhile, investors could find some interest on stocks such as Datasonic after the group won RM19m Mykad deal and Alam Maritim as the group was awarded RM38m oil & gas service contract.

Malaysia News & Highlights

Billionaire Quek and related-parties buying into TH Heavy pushes up share price

Parties linked to banking billionaire Tan Sri Quek Leng Chan have bought a sizeable stake in mid-cap fabricator TH Heavy Engineering Bhd (THHE) through a private placement announced on Monday, sending its stock up a sharp 15% to 53.5 sen. Some 39.6 million shares changed hands at prices ranging from 47 sen to 54.5 sen, making it the fifth most active counter across Bursa Malaysia yesterday. The stock has soared 24% from a trough of 43 sen on May 2. (Source: The Star)

TM has cash to settle RM2bil sukuk, will not issue more bonds for now

Telekom Malaysia Bhd (TM) has sufficient cash to settle its RM2bil sukuk ijarah expiring at the end of the year and remains committed to return RM700mil, or up to 90% of normalised net profits, to its shareholders. “We have adequate bank balances to pay the sukuk and there is no need to issue more bonds at the moment,” group chief financial officer Datuk Bazlan Osman said after the company's AGM. As at Dec 31, 2012, TM had cash and bank balances of RM3.73bil while total borrowings stood at RM7.14bil. (Source: The Star)

AMRB unit wins job extension

Alam Maritim Resources Bhd’s (AMRB) wholly-owned subsidiary, Alam Maritim (M) Sdn Bhd, has been awarded a contract extension by Petronas Carigali Sdn Bhd for the provision of one unit workboat worth RM38mil. In a filing with Bursa Malaysia, AMRB said the one-year contract would be effective from Oct 9 to Oct 8, 2014. “The contract is expected to contribute positively to the earnings and net assets of AMRB for the financial year ending Dec 31, 2013 and beyond,” it said. (Source: The Star)

Salcon to buy asset in China

Salcon Bhd has announced a RM15.25mil asset acquisition agreement with the Water Bureau of Yizheng City (WYBC) in China. The deal involves Yizheng Salcon Wastewater Treatment Company Ltd (YSWWT)and the WBYC. (Source: The Star)

Thai ops lifts F&N earnings

Fraser & Neave Holdings Bhd’s (F&N) pre-tax profit increased to RM65.58mil for the second quarter ended March 31, 2013, compared with RM57.69mil in the same period last year. Revenue also rose to RM882.06mil from RM730.42mil previously. In a statement, F&N said the better performance was mainly due to the recovery in Dairies Thailand, combined with strong performance from the group’s perennially performing soft drinks division. (Source: The Star)

KLIA2 jobbers behind schedule

Malaysia Airports Holdings Bhd (MAHB) said the contractors for the new low-cost airline hub, klia2, may have difficulty in meeting the June 28 deadline. In a filing with Bursa Malaysia, MAHB said the view was expressed by its board of directors at a meeting yesterday despite the commitment given by the contractors. It will soon meet the contractors again to confirm the ability of the contractors to meet the deadline. (Source: The Star)

Foreign News

Dow Rises Above 15,000 as Aussie Weakens on Rate Cut

Global stocks rose, with the Dow Jones Industrial Average closing above 15,000 for the first time, as earnings at companies from Societe Generale SA to DirecTV and Allianz SE beat estimates and German factory orders increased. Australia’s dollar fell as the central bank cut interest rates. The Dow jumped 87.31 points to close at 15,056.2 at 4 p.m. in New York and the Standard & Poor’s 500 Index rose 0.5 percent to 1,625.96, reaching a record for a fourth straight day. The Stoxx Europe 600 Index added 0.3 percent to reach an almost five-year high. Corporate bond risk in Europe retreated to the lowest in three years. The Australian dollar fell versus all of its 16 major peers. Oil slipped 0.6 percent. Ten-year Treasury yields rose two basis points to 1.78 percent, the highest in almost a month.

Job Openings in the U.S. Drop From Almost Five-Year High

Job openings in the U.S. eased in March from the highest level in almost five years, indicating employers are waiting to see how the economy performs as federal budget cuts take effect. The number of positions waiting to be filled declined by 55,000 to 3.84 million from a revised 3.9 million the prior month that were the most since May 2008, the Labor Department said today in Washington. The report also showed hiring decelerated and firings climbed. Companies may be reluctant to add staff amid signs the expansion is slackening this quarter as the January increase in the payroll tax catches up with consumers and across-the-board reductions curb federal outlays. While hiring accelerated last month, bigger gains are needed to propel wage gains and revive economic growth in the second half of 2013.

Australian Banks Pass on Full RBA Rate Cut as Funding Costs Ease

Three of Australia’s major lenders passed on in full the central bank’s interest-rate cut for the first time in 17 months, sending benchmark home-loan costs to the lowest since 2009. Commonwealth Bank of Australia, Westpac Banking Corp. and National Australia Bank Ltd. cut their variable mortgage rate by 25 basis points yesterday after the Reserve Bank of Australia trimmed its key rate by the same amount to a record-low 2.75 percent. Australia and New Zealand Banking Group Ltd. will review its rates on May 10, Annabel Urquart, a Melbourne-based spokeswoman for the bank, said by phone.

Japanese, Australia Stock Futures Rise Amid Stimulus Optimism

Japanese and Australian stock futures rose as optimism grew that stimulus by central banks will boost earnings and as investors await Chinese trade data. American Depositary Receipts of Canon Inc., a camera maker that gets 80 percent of sales outside Japan, climbed 0.6 percent. Those of Coca-Cola Amatil Ltd. rose 1.2 percent, indicating the shares will rebound from the biggest slump in four years, as JPMorgan Chase & Co. advised buying stock in Australia’s largest listed drinks company.

China’s Gold Purchases From Hong Kong Expand to Record

Gold imports by China from Hong Kong more than doubled to an all-time high in March as buyers in the biggest consumer after India boosted purchases, underscoring increased bullion demand in the world’s second-largest economy. Mainland buyers purchased 223,519 kilograms (223.52 metric tons), including scrap, compared with 97,106 kilograms in February, according to data from the Hong Kong government. Net imports by the mainland, after deducting flows from China into Hong Kong, were 130,038 kilograms compared with 60,947 kilograms a month earlier, according to Bloomberg calculations.

(Source: Bloomberg)